Compliance of Accounting Standards and Conceptual Frameworks by CSL Limited

This report analyzes the concept of compliance of accounting standards and conceptual frameworks by CSL Limited. It discusses the theoretical conceptualization of accounting, fundamental qualitative characteristics, and the relevance of accounting data. The report also provides an overview of CSL Limited and its global biotechnological operations.

ACCOUNTING

Contents
Introduction................................................................................................................................3
CSL limited................................................................................................................................3
Theoretical conceptualisation of accounting..............................................................................4
Fundamental Qualitative Characteristics...................................................................................8
Relevance...............................................................................................................................8
Faithful representation..........................................................................................................10
Conclusion................................................................................................................................11
References................................................................................................................................12

Introduction
The report introduces and analysis the concept of compliance of accounting standards
and conceptual frameworks by the organisation named “CSL limited.” Conceptual
framework is a part of financial reporting that has a defined system of objectives and
ideas. Conceptual framework leads to formulation of set of rules in accounting
(Jacobson, Kapur, & Reimann, 2016). It acts as a framework that sets accounting
standards and it provides a basis to resolve the accounting disputes. Although every
organisation comply with conceptual framework and corporation Act, 2001, which
clarifies that liabilities and assets, are undertaken with respective abilities when
defending as per the proceedings against policies, details of the liability, premium
paid, and rules and other proceedings (Jacobson, Kapur, & Reimann, 2016). The
examination regarding handle each transaction with the other actions applicable on
accounts. A discussion and debatable discussion occurred regarding the issues found
relatable to accounting concepts and the measurement in regards to the intangible
assets so that it can handle liabilities and assets (Jacobson, Kapur, & Reimann, 2016).
This report puts a check on the quantitative attributes to the data as given in the
financial reports by considering the inspection of liabilities and assets. Issues related
to non-compliance of procedures and standards have been occurring even when it
does not fulfil the demand of the AAASB (Jacobson, Kapur, & Reimann, 2016).
CSL limited
CSL is a global biotechnological leader that usually delivers and develop innovative
medicines that can protect the lives, prevent public health, and assist the people with
the life threatening conditions so that they can live full lives. The group aims to create
a sustainable value to the stakeholders. The company was established in 1916 in order
to provide services to the health needy people. The company has global specialisation

for the biotechnology that develops markets and researches the product so that it can
prevent serious human medical things (Mosavianpour, Sarmast, Kissoon, and Collet,
2016). The company`s product includes vaccines, cell culture, blood plasma, and
antivenom used in medical and other genetic researches and other manufacturing
applications. The profitability score of the industry is quite relevant to the evaluation
of stock attractiveness as the profitability of the CSL limited is greatly profitable as
the score is eight (Mosavianpour, Sarmast, Kissoon, and Collet, 2016). Company`s
capability with the combined global research and development (R&D) that further
prove excellence to find it efficiently and develop it successfully by delivering
innovations which the patient want and need. All the material facts are to be the part
of the accounting procedure (Smieliauskas, Craig, and Amernic, 2017).
Theoretical conceptualisation of accounting
Accounting theory defines a set framework, assumptions, and other methodologies
that are used in the application of the reporting principles for financial statements. The
main purpose for the financial statements according to the AAS (Australian
Accounting Standards), IFRS (International Financial Reporting standards), other
authoritative pronouncement, and the Corporation Act, 2001 (Laar, Deursen, Dijk,
and Haan, 2017).
Cost principle- As per this principle, it is seen that transaction must be listed at
historical costs. Original cash purchase when purchasing rather than considering the
recent market value (Mosavianpour, Sarmast, Kissoon, and Collet, 2016). The main
objectives of cost principle are invoices, bank transaction, and other sales receipt
confirming to the original purchase price of the asset (Morioka, & Carvalho, 2016). It
represents data on the basis of historical cost with certain financial instrument is
regards to the fair value measurement. Land, capital plant, equipment assets, and

buildings are being recorded less than the historical costs after applying amortisation
and depreciation (Morioka, & Carvalho, 2016).
The residual value and certain useful exists that has been reviewed and adjusted on
the basis of every reporting date. The issue related to the valuation of certain items
such as plant, equipment, and the property occur when they are recognised and when
no economic benefits that are being expected form the use and its disposal.
Impairment tests for the property, equipment, and plant occur when relatable
impairment triggers have been seen and found in the current year (Morioka, &
Carvalho, 2016). As so far, there are not impairment triggers occurred. Certain gain
and loss in regards to plant, equipment, and property has been determined to compare
the proceeds from the current year that are further included in the comprehensive
statement of income once realised (Mosavianpour, Sarmast, Kissoon, and Collet,
2016). It is seen that leases of equipment, plant, and property that has substantially the
related risks and rewards ownership parted in the leases (Morioka, & Carvalho, 2016).
This finance has been capitalised in the inception of fair value of the leased property
when it is lower if the present value of the base payments. The finace cost has been
reported in the comprehensive income for a lease period of time to produce an rate of
interest on the liability`s remaining balance (Morioka, & Carvalho, 2016).

Materiality- The materiality considers quantitative and qualitative features. This
concept ensures financial information to make difference to the users of the financial
statements (Smieliauskas, Craig, and Amernic, 2017). This concept states that
compliance to the accounting standards can be denied if the net effect of performing
the task is negligible (Smieliauskas, Craig, and Amernic, 2017). It is important to
maintain certain materiality on the basis of significance, nature, and the value of the
external stakeholders (Mosavianpour, Sarmast, Kissoon, and Collet, 2016). It will
affect the investment decision of investors. Within the year, the group has completed
the rest of 150 million dollars of the buyback as in October 2016 being the part of
capital management program (AASB standard, 2015).
It is seen that government grants have been recognised at fair value where it is a
reasonable assurance, which the grant will receive and at the same time, group
comply with the attached situations. Government spending grants related to expense
where they are intended to compensate (AASB standard, 2015). Receiving the
payment for no future costs that are recognised in relation to equipment, property, and
plant as it is being included in comprehensive income as per the statement. It is

realised as the statement on the basis of straight line in the expected useful life of the
assets (AASB standard, 2015).
In order to maintain exchange rate, it is important to facilitate comparability of the
performance of the group. It is done in three parts such as by converting the profits of
current year of the organisations as the reported currency rather than US dollars at
rate, where it is comparable and applicable (Mosavianpour, Sarmast, Kissoon, and
Collet, 2016). The company lays down material transaction that has been booked
applicable to adjustment for the foreign currency gains and losses at the same time
(AASB standard, 2015). The transactional impact on currency effect, foreign currency
effect, and the transactional currency effect is an amount that has been reported net
profits as adjusted in order to calculate the outcome of constant currency. Amounts
relating to the legal disputes are separated from the accruals into the legal provision
(AASB standard, 2015). The provision for classification and measurement of the
financial instruments introduced new hedging accounting that includes treatment of
the hedging costs, new and expected impairment loss model, and other risks model,
which will require the timely recognition of the credit losses. A near assessment of the
impactful materiality effect does not think any adoption of AASB 9 (AASB standard,
2015).
The company has undertaken the frame of internal and process compliance
constructed in the light of CSL policies, procedures, practises, and rules. It assures the
establishment of corporate and business strategies in order to get implemented and

managed. Reasonable assurance is related to material exposures to the risks identified
with significant managerial, financial, and operational information that is accurate,
reliable, timely, and relevant. There should be appropriate level of compliance with
standards, applicable, regulations, policies, and procedures (Libby, 2017). It provides
a better relevance and understanding of the positions as the consequence of the
adverse impact of materiality that come under light after the payment procedure that
includes shares being delivered as per the post vesting. The board provides senior
executive in relation to other material misstatement and omissions in the reports of
annual sum ups (Libby, 2017). Finally leading it to the material error that would be
based on the correct financial reports and have error not occurred yet. For the current
assets, it is seen that trade receivable are not further discounted when the impact of
discounting is immaterial (CSL limited, 2016).
Conservative- This includes careful insight in the accounting process, as profits will
not be included until the time when it is realised. It is seen that a movement in the
USD exchange rate will be against EUR, AUD and GBP will not finally generate any
material effect to profit after tax (Maas, Schaltegger, & Crutzen, 2016). The carrying
value of the financial liabilities and assets that is materiality same as per the fair value
(CSL limited, 2016).
Tax reformation as per US that came into the effect of group in financial statements
ended in June, 2018. The group has been affected by lower taxation with the need to
see the deferred balances at the new rate at what it is expected to realised
(Christensen, Lee, Walker, and Zeng, 2015). The effect of certain items and deferred
balances have been included in the financial year and they are immaterial to the group
(CSL limited, 2016).

Provisions are not further recognised for the estimated future loss in operations. It
reflects that management estimated of expenditure as required so that it could settle
the main current obligation on the date of reporting (Christensen, Lee, Walker, and
Zeng, 2015). If the effect of time value is material then the provisions are further
determined by the discounting expected future cash flows in order to settle certain
obligations for the pre-tax discount, which reflects market assessment with time value
of money and associated risks as specified in the obligation (Christensen, Lee,
Walker, and Zeng, 2015).
Fundamental Qualitative Characteristics
The demand for accounting data through the lender, creditor, and investor, makes
fundamental qualitative characteristics that are needed in accounting data (CSL
limited, 2015). Following are the two fundamental qualitative characteristics-
Relevance
According to the international Accounting standard board, the relevance is the ability
of creating the differences in relation to the decisions taken by the user as per the
capital provider (Morioka, and Carvalho, 2016). This fundamental qualitative
characteristic is normally operationalized in respect of the analytical value as well as
the positive value (CSL limited, 2015). The analytical value normally means the data
on the capability of firm to produce upcoming cash flows. International Accounting
standard board stated about the financial phenomenon has analytical value in a case
when this has value as the inputs to analytical procedure utilised through the capital
provider to create the personal expectation in respect of the upcoming period (CSL
limited, 2015). The analytical value is regarded as the significant pointer of the
relevance in respect of the significance of decision (Libby, 2017). There are certain
fundamental measures of the predictive value (CSL limited, 2016). These are below-

1. the level to which annual report renders the forward-approaching statement
2. Whether company’s annual report discloses the data related to business
opportunities as well as business risk, and whether an organisation utilises the
fair value (CSL limited, 2015).
The forward-approaching statements normally define expectation of administration
for the upcoming period of the corporation. For user and capital provider of the
annual reports, this data is significant as the administration has access to personal data
to render the estimate that is not available to the stakeholders of company. The
financial report having relevancy, must consider the financial information and non-
financial information (CSL limited, 2015).
In this way, this should be capable to render view in the opportunities related to
business, business risk, as well as probable upcoming scene for an organisation. It is
stated by previous study that in comparison to historical cost, fair value presents the
better analytical value of financial reporting data in comparison of the historical cost
(CSL limited, 2018). It is also argued that the fair value accounting renders the
significant data in comparison of the historical cost because this states the asset’s
current value, in place of the buying cost. Moreover, the fair value is considered as
accounting measure adopted by FASB as well as IASB (CSL limited, 2016). The
financial accounting standard board and international accounting standard board takes
fair value in the consideration as very significant method to improve the relevance
feature (CSL limited, 2018). Furthermore, the assenting value is also useful in
assuring the relevancy of the financial data. In the addition of this, in a case where the
data in annual report renders response to a user of annual report in relation to last
event, it would support them to authorise or modify the expectation (CSL limited,
2018).

Faithful representation
The faithful representation is a concept. As per this concept, the financial statement of
company should be represent the correct position of the company’s business (CSL
limited, 2018). For an instance, if it is reported by the company in the balance
sheet that there was accounts receivable of amounting $1,800,000 as in the end of
month, in that case that amount must indeed have stated on this date (CSL limited,
2018). This concept is required to be extended to every part of the financial statement
of company, such as outcomes related to functions, financial condition of company,
and reporting entity’s cash flows. This concept says that the financial data should be
complete to represent the clear picture of the financial condition of the entity. The
reason is that in case of omission, the financial statements do not tell the actual
position of corporation (Carneiro, Rodrigues, and Craig, 2017).
Additionally, it is also required that the financial statements of the company should be
free from errors. In the absence of this requirement, the company will not be able to
get pre-determined targets. The company will also not be able to get the positive
results (Carneiro, Rodrigues, and Craig, 2017). In the addition of this, the concept
‘faithful representation’ says that the financial statements of company should be
unbiased otherwise; the users of financial statements will not be able to understand
the financial statements properly (Mosavianpour, Sarmast, Kissoon, and Collet,
2016). CSL Limited follows both fundamental qualitative characteristics such as
relevance and faithful representation (Carneiro, Rodrigues, and Craig, 2017). For an
example, CSL limited represents the inventories faithfully and with relevance for
developing the better understanding-

(Annual Report, 2018)
Conclusion
As per notes to accounts and annual report of CSL limited, it is noticed that company
has prepared its financial statements according to Australian Accounting Standards
and International Accounting Standard Board. The company has complied with all the
revised standards issued by AASB and IASB, which are applied to the operation of
the company. Nevertheless, the revised standards neither have affected the company`s
financial results nor does it bring any change to accounting procedures
(Mosavianpour, Sarmast, Kissoon, and Collet, 2016). The above report discussion
concludes that the company complies with the appropriate AASBs and other IASBs
has been implemented. The main principle is associated with the revenue should be
recognised when the services and goods are being transferred to the customers which
reflect consideration paid to the organisation that expects to be entitled in the
exchange of services and the goods. The amendments see how an account for the
certain type of share payment on the basis of transaction and its relative vesting
conditions and the measurement of the cash settlement share based on payment
(Mosavianpour, Sarmast, Kissoon, and Collet, 2016).

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